Okay, I've just finished reading the ANH novel, and there is a big difference in the way the Battle of Yavin is described. In the movie, there are only two squadrons, Red and Gold, right? Only X and Y-Wings?

Well, in the novel, I'm sure it says that there are four squadrons, Yellow, Red, Blue, and Green, and that Yellow and Green were cover squads for Red and Gold. There were no cover squads in the movie! Red squadron had to do strike and cover together.

I'm wondering, is this how Lucas originally wanted the Battle to go? Because he wrote the ANH novel.

Um, you do realize that movies can't possibly show everything, right? By their very nature. The movie is compressed into two hours. The three-day trip from Tatooine to Alderaan was compressed (symbolically) into about five minutes. The several days of training and preparation before the Battle of Yavin were ommitted altogether. (You don't really think Dodonna managed to spot the thermal exhaust port after a three-second glimpse at the schema, did you?)

The movie included Red group (X-wings) and Blue group (Y-wings) (I'm pretty sure Gold group was only in RotJ; the Falcon and her escorts).

The novel (as I recall, it's been years since I read it) makes it pretty clear that Green (X-wings) and Yellow (Y-wings) groups cut across the Death Star's equator to draw fire, in various feints that prevented the Empire from realizing that the target was the thermal exhaust port.

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It's like I always say: When the going gets tough, the tough . . . switch to artillery.

Yeah, I know that the movie is only two hours long, and that there's a lot to fit in during that time, but wouldn't Lucas have been able to fit Green and Yellow squadrons into the battle as well as Red and Blue? He managed to fit Red, Gold, Green, and Gray into the Battle of Endor, and they were all made up of different craft. At the time of the Battle of Yavin, the Alliance only had X and Y-Wings.

There is a lot in the book that doesn't reflect what was shown in the movie. I think the book was written and released a while before production of the movie began. Consider the novelization of ANH to be the final rough-draft.
There is also a lot in the book (at least the copy I have, which I bought in 1977) that contradicts other events that were revealed later.
When you read about all the drafts that Star Wars went through on it's way to production, simply because there were so many ideas that were impossable to pull off with the cinematic techniques available at the time, the loss of two squads of fighters is no surprise. The ground battle at the end of Episode 1 is a left-over from an idea G.L. wanted to use in the original movie, something about thousands of wookies overrunning an Imperial prison base (later to be the Death Star) and battling with an equal number of Imperial troops. He couldn't film it properly back then on the budget he had, so he dropped it and made it a space battle instead, which could be pulled off.

Lucas initially wanted to have tribal wookiees running around on Endor, but then he realized that, through Chewbacca, he'd already established wookiees as being intelligent, civilized, technically adept beings, not primitives.

Enter the Ewoks. ^_^

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It's like I always say: When the going gets tough, the tough . . . switch to artillery.